All Topics / Help Needed! / Capital Gains Tax

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  • Profile photo of runnymanrunnyman
    Participant
    @runnyman
    Join Date: 2012
    Post Count: 4

    Hi there,

    Wondered if anyone could advise!

    I own 2 properties.  One an IP since June 2015 and another my PPOR since July 16.

    I am planning on undertaking renovations on my PPOR which will take a couple of months and as it happens my tenant is moving out of my IP at the same time.  My question is….does the 6 year CGT period reset if I moved back into the IP for a couple of months.  I would still own my PPOR obviously but not live there during this period.

    Just thought moving back for this period might have the added benefit of saving tax!

    Thanks!

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    have you previously lived in the IP? If so the 6 year rule could be reset.

    If not the 6 year rule could start from you moving in and out again.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of runnymanrunnyman
    Participant
    @runnyman
    Join Date: 2012
    Post Count: 4

    Yes Terry I previously lived in the IP from June 2011 to June 2015.

    So does this mean if I move back in prior to June 2021 then the 6 year would reset?

     

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    In that case the 6 year rule could reset as long as the property qualifies as your main residence.

    But if you own another property you cannot choose both as the main residence for an overlapping period.

     

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of runnymanrunnyman
    Participant
    @runnyman
    Join Date: 2012
    Post Count: 4

    Thanks Terry for the feedback! Really appreciate it!

    But if you own another property you cannot choose both as the main residence for an overlapping period.

    So with respect to this point.  If my IP becomes my PPOR for 2 months seems like I can reset the 6 year.  Meaning no CGT on the 6 year period to date.  So given I own both properties but only 1 can be my main residence.  If I am only going to be living in my IP for 2 months then really is there any tax implications on my usual main residence as it wont be lived in or rented out for that 2 month period anyway?  I guess what I am saying is I understand you cant have 2 main residences but if I am allowed to move back into my IP for 2 months to reset is there any significant tax consequences on the property I move out of for that short period.

    Thanks again Terry!

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    You can actually have many many residences, but not more than 1 can be exempt from CGT for an overlapping period.

    But the good part is that you can decide which one to count as your main residence for CGT at the point of sale of the first one. The strategy is to wait until the first is sold and then make an assessment at that point. In some cases it will be better to choose the one that is sold and in other cases choose the one that wasn’t sold.

    You might choose investment one because

    a) you could use interest, rates and other costs on the place you are living in to reduce the CGT

    b) and if the property is your main residence at the date of your death, the property’s cost base will be reset to the value as of the date of debt.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of ASVPRockASVPRock
    Participant
    @asvprock
    Join Date: 2021
    Post Count: 0

    For those who might not know, let me remind you that capital gains are the profits from the sale of an asset — shares of stock, a piece of land, a business — and generally are considered taxable income. How much these gains are taxed depends a lot on how long you held the asset before selling. For example, in 2020 the capital gains tax rates were either 0%, 15%, or 20% for most assets held for more than a year. I prefer using the services from xyz   because they are a renowned company who provides their clients with the best possible financial advice.

    • This reply was modified 2 months, 3 weeks ago by Profile photo of Terryw Terryw.
    • This reply was modified 2 months, 3 weeks ago by Profile photo of Benny Benny. Reason: Removed advertising - Moderator
    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,213

    This is not the case. There are no rates for CGT in Australia. The capital gain gets added to other income. It is also not financial advice when advising on capital gains, but tax adice.

    Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
    https://terryw.com.au/
    Email Me

    Lawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://Terryw.com.au/

    Profile photo of runnymanrunnyman
    Participant
    @runnyman
    Join Date: 2012
    Post Count: 4

    Hi Terry sent you a quick email.  Hope you didnt mind taking a quick look at it.

    Much appreciated!

     

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